Simon’s Backup Weblog

Those Intel Macs? They need to be cheap…

Posted in Uncategorized by Simon Bisson on January 2, 2006

Yesterday we went out and bought a new PC.

Nothing fancy, but something to eventually replace my current desktop, which is slowly failing after a PSU went “phut”, let out the magic smoke, and took out a chunk of the motherboard. It still works, but there’s going to be a day soon when it finally kicks the bit bucket.

We wandered down to PC World, where we picked up a small Athlon 64 machine. The specifications weren’t too bad: 2GHz 64 bit processor, on-board ATI Radeon graphics card, and 512 MB of RAM, a dual layer DVD burner, 160GB of 7200RPM SATA hard disc, built-in gigabit Ethernet, USB 2.0 ports, firewire, and a whole pile of media readers. It’s quiet and small, and in a reasonably attractive mirrored black case. The days of the beige box are long gone.

Not bad pricing, either. Including VAT it cost us around £360. We didn’t need a monitor (they’d have sold us a 17″ LCD for another £100).

That’s over £130 cheaper than a Mac Mini, for a machine that’s significantly more powerful – and with enough expansion capability to turn it into a nice little media box, too. (I have made one change, dropping in an extra half gig of RAM, but I’m currently using it to run a beta version of Windows Vista, with lots of debug code still in place, and it’s performing comparably to a hyperthreaded Pentium 4 machine.)

With Apple rumoured to be announcing its Intel Mac Mini in a week or so, it’s going to need to seriously consider its pricing structures. People are going to walk into PC World, look at the specifications of a hypothetical Intel Mini, and compare it with a generic Intel or AMD PC. It’s going to be (as they say) Apples to apples – not G5 to P4. In which case, prices are going to need to come down some. Sure, Apple will be able to initially have some uplift thanks to the brand name, but the days of high margins on branded hardware will be behind them, and the market will force them to parity with the HPs and Dells of the world.

Interesting times.


46 Responses to 'Those Intel Macs? They need to be cheap…'

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  1. thunderbox said,

    “Apple will be able to initially have some uplift thanks to the brand name, but the days of high margins on branded hardware will be behind them, and the market will force them to parity with the HPs and Dells of the world.”

    That statement values the OS at zero. It values “No viruses, spyware or other security nasties” and the rest of SWP’s list at at zero.

    It also values the class-leading apps that run on OSX – like Logic (both versions) and Final Cut (both versions) – at zero.

    In other words it’s the sort of analysis a recovering EE would make. 🙂

  2. sbisson said,

    I’m not valuing the OS at zero – I’m just comparing out of the box costs, which is what most consumer purchasers will use. Consumers don’t see OSes as a cost, they see them as an integral piece of the hardware.

    (Most Windows users will get XP SP2 now, which is a much more secure beast than the earlier versions, and Vista adds plenty of new security tools above and beyond OS X.)

    I’m looking at low end systems here, not the big dual core G5s that serious digital media creators use. Users after those type of system won’t be wandering into PC World carrying a pull out of offers from the Sun. Apple needs to see that the Mini is a tool for that level of customer, who may not be as aspiratonal as most Mac users.

    And apps are a whole different kettle of fish – most of the high end Apple tools are priced appropriately for their value to the end user. I don’t suggest for a minute that Logic or Final Cut are suitable for the PC World or Dixons customer. iLife is more their sort of thing.

    Until Apple changes the way it sells its hardware it won’t get much beyond its current 5% market share. Which is a pity.

  3. spride said,

    Missed point error. The cost of a PC isn’t the ticket price, it’s the TCO, and that includes heartache and confusion for the end user. That’s almost wholly absent if you buy a Mac.

  4. megadog said,

    It’ll be interesting to see what happens when the Intel-Macs hit the street. I can see an initial burst of enthusiasm and significant sales, followed by a retrenchment as some degree of market-saturation sets in and people realisen they’ve bought overpriced hype.

    Then will come the interesting bit. With Microsoft’s stated abandonment of IE-for-OSX, there will probably be quite a few dissatisfied new Intel-Mac-owners out there when they find that they can’t do their online shopping/gambling/gaming/banking because of a lack of some essential bit of ActiveX or .NET; while some new-Mac-owners will persist with trying to run the Windows-apps they know/love and the Windows software they’ve bought over the last ten years in virtual-PC-style emulation environments this won’t satisfy all but the simplest/humblest users and applications.

    Microsoft could then pull an ace out of its sleeve: a slim, tight version of “Vista Home” customized specially to replace OSX on the Intel-Macs – something which should actually be quite quick & easy to achieve [since the hardware-and-driver-diversity issues of the generic PC world are much less in the Mac-world; it’s not as if MS would need to support legacy hardware in such a case now is it…] – and sold at a bargain price to tempt people back.

  5. thunderbox said,

    You say you’re not valuing the OS at zero, and then you go on to claim that customers see the OS as part of the box, which justifies you valuing the OS at…zero.

    Most of the non-technical Windows users I know believe that Vista will fix the Virus/Trojan/Spyware problem in exactly the same way that XP did, and W2k did before it.

    I could take you to visit folk who’re completely at their wits end with their or their kids PCs. Who have battled manfully, who have listened to advice about XP2, FireFox, AdAware and all the rest and simply cannot keep their systems functional on any sane duty cycle.

    “I don’t suggest for a minute that Logic or Final Cut are suitable for the PC World or Dixons customer”

    The Express versions most definitely are.

  6. sbisson said,

    TCO isn’t what the man-on-the-street looks for.

    Apple is going to need to educate them – and I don’t think it knows how to do so.

    (And I personally find that my Mac is as reliable as my PCs. My only PC problems in the last couple of years have been hardware ones – usually hard drive failures)

  7. sbisson said,

    Good news – you don’t need to type Intel anymore! They’re chaning their logo and dropping the dropped “e”…

  8. sbisson said,

    I’m using Vista 5270 at the moment. It’s interesting how many iLife-style apps are starting to appear in there.

  9. sbisson said,

    I’m not sure where you’re seeing me value the OS at zero – I’m explicitly talking about the takehome price of a box, so comparing the bundle price. It would be nice if hardware was sold without OSes, but that’s not te way the market works, and we’ve got IBM to blame for that.

    If you’re taking about TCO, then there’s a whole ‘nother kettle of fish to deal with…

    I still contend that it is possible to keep a broadband-connected Windows box spyware and virus free if appropriate precautions are taken from scratch – even using IE. It took Mary six hours to get a standard SP2 copy of XP infected by spyware (with no AV or anti-spyware installed), and that was only by deliberately installing a known malware host.

    Dial up is a lot harder – it takes too long to download a typical set of patches over a 56K modem link. I do think that work needs to be done on getting patches better distributed, but the same can be said for security fixes to OS X. It’s a matter of luck that no one has written any exploits for the Java bugs…

    The problem that many infected machines have is rootkit versions of CoolWebSearch which are a bitch to uninstall.

    I take your point on the Express tools.

  10. megadog said,

    Must confess, the iLife-style stuff doesn’t really interest me (or, I suspect, the majority of PC users). Decent frame-rate for gaming and – by implication – rapid/diverse game-software-availability – are probably the 2 drivers which influence the biggest number of over-the-counter computer sales.

    [For me, MS Money comes pretty darned close to #1 in the ‘must have’ list…]

    If/when me and my clients migrate to Vista, I hope that by then MS have a stripped version – ‘Vista Professional’ – that doesn’t burden users with a whole slew of consumer-oriented fluff.

  11. anonymous said,

    Isn’t the first day of the january sales somewhat of “choosing your data point carefully to allow it to back up your theory”?

    And out of the box, you seem to be missing not just the OS, but the iLife apps for example….

    And the final thing is, how *loud* is that machine. Could you put it in a normal living room under the TV? Or are you still not comparing apples and oranges by painting the apples orange?

  12. codepope said,

    Isn’t the first day of the january sales somewhat of “choosing your data point carefully to allow it to back up your theory”?

    And out of the box, you seem to be missing not just the OS, but the iLife apps for example….

    And the final thing is, how *loud* is that machine. Could you put it in a normal living room under the TV? Or are you still not comparing apples and oranges by painting the apples orange?

  13. codepope said,

    That’ll be the extra premium Ultimate edition then.

  14. codepope said,

    So PC’s just play games then?

  15. sbisson said,

    It’s pretty quiet – not much louder than our Sky+ box! But yes, the Mini has the edge on the decibels.

    I hadn’t really considered the January sales effect. In fact I suspect I could find similar (and probably cheaper) hardware on line. I just didn’t want to wait 5 days to get something similar from Scan or RL…

  16. sbisson said,

    I believe so. Even so, Windows Photo Gallery is going to be in the standard releases. I’m not sure about the HD DVD tool though…

  17. codepope said,

    I’d get your Sky+ box fixed then. 🙂

    And IME, no you won’t find cheaper at Scan or RL. With PC World specifically, you are basically dealing with the Tesco of the computer stores; combos piled high, sold cheap. The january sales are making their prices look better at this point, even over the small/medium distro-matics.

    Here, that box doesn’t say Packard Bell on the front by any chance?

  18. fba said,

    Just out of interest which manufacturer was this from?

    Apple will be looking to compete with Dell, HP and Sony – not Acer, Advent and Packard Bell….

  19. codepope said,

    Well, MS *have* to put out a HD DVD tool; it’s their iHD format for the interactivity layer, and they have a vested interest in HD DVD taking off, if only to hurt Sony.

    The biggest problem with the Vista marketechture is that it will end up confusing more punters, but I guess MS have lain the ground work for that by letting OEMs use Media Centre XP on non media centreish boxes.

  20. spride said,

    > Apple is going to need to educate them – and I don’t think it knows how to do so

    So the whole ‘Switch’ campaign, that got people to switch, wasn’t about educating people about the differences?

  21. sbisson said,

    Ah yes, a great success. Not.

    There was no change in market share as a result of it. A lovely idea, yes, but the one thing people remember is Ellen Feiss – not the message.

    The one thing that is working for Apple is the iPod halo. It’s what got me back after many years away. The only reason why I haven’t upgraded my PowerBook is that I can’t afford a new one at the moment.

  22. megadog said,

    I’d bet that the majority of home PCs [specially those in the 17-24 demographic] are bought/used predominantly for gaming.

    Among us older types there’s more ‘business/professional’ usage though – personal finance for example [how else do you keep track of your expenses?]. The “media centre” home computer certainly doesn’t seem to have caught on to any great extent among people I know: they already have their TiVo/Sky+ boxes, widescreen TVs and £20-from-Tesco DVD-players for that sort of thing. As to digital photography, well in the consumer end of the market the big thing seems to be those little printers that you plug your digital-camera into and then print off bleedthrough-ridden easily smudged hard-copies of the photos. Sigh…

  23. marypcb said,

    If Apple wants to compete with premium brands it will never be a significant % of sales then. A lot of people wanting a new box will look round PC Whirl and think, as we did, that Packard Bell looks like the best price…

  24. codepope said,

    Ah, the old “Let’s pick a demographic” routine. Looking at my tame sample users, the strange thing is, no gaming happens on either of their PCs. It’s all about music and photos and the net for them.

    The Media Centre PC isn’t a compelling proposition as it is currently packaged and it’s in a completely different price bracket compared to a Tivo/Sky+/DVD Player/Recorder. And thats why the Media Centre PC hasn’t taken off.

  25. marypcb said,

    we don’t value the OS at zero, but we think the average PC World customer may well do 😉

    My measure on the success/failure of SP2 on spyware is that the reader questions had got to 7 out of 10 being about spyware pre SP2 and now they’re back to less than 1 in 20. Far from perfect but back from the brink.

  26. etriganuk said,

    So, effectively, you’re saying nothing’s going to change? Macs don’t compete on ticket price right now. Nor are they likely to in the future, as it’s a game they can’t win at, as you point out. And I don’t think they’re stupid enough to start that game themselves.

    They’ve had years of knowing how to deal with bad comparative copy and advertising. And I’m not entirely sure they care. I think they’re happy for people who shop by ticket price to go buy a PC.

    So, to the echoes of “doooom, dooooom” in your article – my guess is Apple’s response would be “Like we care.”

    But you’re not stupid enough not to know all of the above. So why write what you did in the first place?

  27. sbisson said,

    I think they do have to change. They’re moving from one niche market place to a larger, more competitive one. The old “we’re different” marketing campaigns won’t work, and Apple will be forced to compete on its merits.

    They’re also in a position where their premium applications are starting to see significant cross-platform competition from more experienced software companies.

    I suspect that the key will be the iPod halo, and a more consistent media PC experience from the Mac. Selling on security would be a good move, too (until the black hats took it as a challenge).

    (and selfishly I just want a cheap replacement for my PowerBook!)

  28. thunderbox said,

    “we think the average PC World customer may well do”

    Your evidence for that being?

    “the reader questions had got to 7 out of 10 being about spyware pre SP2 and now they’re back to less than 1 in 20”

    Think about your sampling [Hint: It’s not random]

  29. marypcb said,

    it’s opinion; I think from what readers ask and what I overhear in shops that the less sophisticated average PC World customer (mythical beast, as they may be) is more interested in what they want to do than in the tools they use to do it.

    the readers aren’t a random sample (what would be, do you think?) but they are a data point for me, and they might be representative of what I think of as an average PC World customer; they’re PC users with Windows XP who read a particular magazine, have a problem and write in about it. They trend to the novice end (about 80-20 novice to experienced user with a knotty problem), they typically don’t know the difference between Windows and Office, or between IE and the Acrobat viewer. A lot of them say they shop at PC World 😉

  30. tanais said,

    The market is changing. PCs are moving out of the study and into the living room and this is at present a small niche — its a growing one but looking at Apple’s traditional skills of taking old-hat technology an repackaging it in a way as to make sense to the customer is their skill here. Apple traditionally makes closed box solutions which is what the living room customer likes also. This comes at a price but not a hugely exorbitant one.

    I think Apple knows what it is doing and it will price its equipment accordingly and for where it will be intended.

  31. megadog said,

    From where I’m sitting, Apple is in serious danger of becoming “the iPod-and-iTunes company” at the expense of a serious presence selling computers. Apple have essentially _no_ presence in the corporate end of the computing business [where the hardware-price of the sale is a small percentage of thw overall support/consultancy/maintenance/finance package]; Apple just don’t have a business marketing team!

    Of course if Apple want to become a media-business then that’s their choice – but to build a long-term profit from that sector IMHO they should follow the lead of Sony and start producing/acquiring rights to the content as well as the delivery-platform.

  32. tanais said,

    Experience has shown that future gazing is a fun but largely inaccurate waste of time. I have listened to a lot of geeks on their thread in their professional jobs make claims and assumptions and pontificate certainties that have simply never panned out or happened. So I am content to just watch and not really care one way or the other. I’m not sure Apple is all that interested in business and corporations as much as living rooms and set top boxes and Being the iPod company is valid seeing as they make more money from iPod and iTunes than from iMacs. 🙂

    There’s more to sales than corporate customers

  33. megadog said,

    But corporate customers who buy in lots-of-50,000 and sign up to ten-year consult/support/finance deals are seriously important in that they provide the “base-load” income which serves to tide your business over the ups and downs that inevitably prevail in the fickle consumer-market segment.

    IBM got wise to this in the 80s; General Electric likewise. General Electric (Capital) is the most profitable of the various GE businesses. They sell money, not lightbulbs or aero-engines or computers.

  34. fba said,

    The question is – do Apple want to be a hardware vendor with their own OS or a OS vendor with their own hardware? 5% sounds like a pretty healthy sale of the hardware market to me…

  35. lpetrazickis said,

    Uh, doesn’t Dell have a bigger market share than Packard Bell?:P

  36. lpetrazickis said,

    Mac IE doesn’t do ActiveX.

  37. tanais said,

    Maybe Apple learned not to extend beyond its core competencies? Its a bigger company now than it has ever been but its also a largely two-trick pony (iPod/iTunes and Mac/OSX) and its very focussed on doing what it is doing to the best of its abilities so as to build a better basis for what it will do what it does next. Concurrent OS development of MacOS on Intel shows that they learned their mistakes of Rhapsody.

    I’ve lost interest in the whole corporate holy grail. And when I see another journo contribute to yet more pages of interminable dreary copy I just think “We’ll all find out in good time”; Maybe Simon’s right, maybe he’s wrong — at the end of they day It won’t change a single thing so why bother trying to second guess the price of products that haven’t even seen the light of day yet? (Which he didn’t do… he just said Apple better release a competitively priced intel Mac — which seems fair to me).

    FWIW I hope Apple will make a competitively priced intel Mac but if not its no big deal if they don’t. Its all about how cheaply things can be knocked out and if the profit margin is supported. Apple seems to know that big boxes with no expansion potential are expensive to ship which is why iMacs and Mac Minis are as they are.

  38. marypcb said,

    Sony’s a premium brand. If you compete with Dell you compete on price. It’s the question: what *does* Apple want to be and how will running on the same hardware as PC manufacturers change how they sit in the market.

  39. tanais said,

    >Until Apple changes the way it sells its hardware it won’t get much beyond
    >its current 5% market share. Which is a pity.

    I’m wondering why this is a pity? Maybe Apple is happy to be at 5%?

    BTW I remember when Apple was at less than 1% of market share then 3% then 5% of market share. That seems like magaging growth. Maybe its not enough for some of the “Internet Experts” here, but maybe its enough for Apple’s shareholders?

  40. stillcarl said,

    I’ve had Java viruses – or at least my virus-detectors have claimed they’re there.

    Does the average customer even know there’s a difference between processors in Apples and PCs? I doubt it. They just know Apples are different to PCs. They’ll still think that after the processors become the same.

    Apples are cheap now too – just not dirt-cheap like PCs.

  41. daveon said,

    I have to admit I’ve now 12 months of virus and spyware free computing on my Windows Box – with all the updates turned on and installed asap. I even had my Spyware catcher mysteriously switch itself off for a few months and I didn’t notice and when it came back it still found nothing.

    Given the “naughty” types of thing I do with my PC this is pretty good.

    I did have a network shutdown over Christmas and I re-did my wireless security but everything seems pretty solid even now.

    The only problem I have is from some OEM software that came with the printer which is causing me grief.

  42. daveon said,

    I certainly agree with you about the packaging of the Media Centre PCs, but I don’t think it’ll be too long before you start to see really nicely styled boxes ready for your TV with dual tuners and enormous HDDs. The key is getting the price point from the current £500-£600 down to the £300(ish) level, which, with some clever jiggling of hardware puts it into the high end consumer market. Especially if that includes 5.1 or 7.1 sound and some other goodies.

    When we move in Feb/Mar I’m planning to get a Media Centre PC and forget about anything that isn’t Freeview (I got rightly tired of the Simpsons Channel (Sky1) and the Charmed Channel (Living) over Christmas).

    Everything else we watch tends to come from “other” sources.

  43. daveon said,

    The noise issue is being dealt with by many of the case makers now, but it’s still a little way off being standard. The Shuttle cases and some of the Asus media systems are stunning in both looks and noise potential.

  44. codepope said,

    And premium pricing for those low noise features, though I must say, the Shuttle here is damn noisy these days.

  45. daveon said,

    Interesting to know. A co-worker just got one for his living room – but I was curious about it. The ASus media cases are cheaper and look very cool but I am concerned about the noise.

    We have a cupboard in the new flat where a Media Centre could live which would be good, especially as the remotes tend to be RF rather than IR.

  46. marypcb said,

    in 15 years I’ve had one virus (on a floppy from a contributor), one piece of spyware (Bonzi buddy) and I was phished once at AOL (500 unread messages after Christmas, a well-crafted email purporting to be an internal newsletter with the right people on the cc list that I spotted the second after I clicked the link). I don’t click links, I can spot spam and phishing and I don’t have kids downloading stuff. It’s harder if you’re a punter without much experience, but I really did spend 6 hours of cruising porn and pirate sites without finding any spyware at all.

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